I cite

Foreclosure activity up across most US metro areas

The political opening: attack the myth of home ownership as freedom and success. This myth has been an anchor of consumer oriented capitalism, a capitalism designed to diminish the power of organized workers (workers with a mortgage to pay don't strike) and amplify consumer spending. We should also add: increase isolation from others, amplify self-absorption, incite keeping up with the neighbors, diminish common experiences, etc.

The two pillars of the so-called American dream are single family private homes and cars. Yet both of these are destroying the planet (suburban living is energy inefficient and basically requires private transportation). Right now, neoliberalism's evolution into despotic financialism is making both homes and cars impossibilities for significant percentages of the population.

So now it's time to wake up from this dream into the Real of the communist horizon: equitable, collective alternatives in living and transportation. In some cities (not a lot in the US), squatters are leading forces in this direction. Campaigns around cycling are also important as they wage war on the hegemony of the car.

Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of this year than in the first half of 2009, new data shows.

The trend is the latest sign that the nation's foreclosure crisis is worsening as homeowners battling high unemployment, slow job growth and an uneven rebound in home prices continue to fall behind on their mortgage payments.

In all, 154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June, foreclosure listing firm RealtyTrac Inc. said Thursday.

The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.

The latest figures show the threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona, which have borne the brunt of the fallout from the housing crisis.

Those states saw housing values surge during the housing boom years. When the boom ended, values collapsed and foreclosures soared.

"The face of foreclosure is driven much more now by unemployment than in the past, and it's moving out from the places where we've been focusing on in the last few years," said Rick Sharga, a senior vice president at RealtyTrac. "The combination of a weak job market and a weak housing market is making it difficult in some of these areas."

via news.yahoo.com

The job machine grinds to a halt

One of the stranger elements of the current attention to the disconnect between corporate profits and jobs: some of us have lived through this before. It's old news, a repeat. It already happened. Where? In Michigan, in the auto sector. After the defeat of the unions in the 70s, the massive layoffs and cut backs, the elimination of hundreds of thousands of jobs, the big three auto makers in the US became increasingly profitable. Remember the rhetoric: stream-lining, efficiency, flexibility. Michael Moore covers some of this in Roger and Me. I'm not saying that the current attention to the calamity of 30 years of neoliberalism isn't noteworthy. It is. And it needs to be put in a context that let know that there is nothing unpredictable or unexpected about current unemployment. As Chrysler goes, so goes the nation. Or what's good for GM is good for America. The neoliberal powers that be think of good for GM as good for stockholders. For the last thirty years, we've been inculcated with this same way of thinking. Now it's truth is appearing to those who convinced themselves that unions and pensions were bad and enormous bonuses and golden parachutes were good.

Today, wages are still down, employment remains low and sales revenue isn't up much, either. But profits are the outlier. They're positively soaring.

Among the 175 companies in the Standard & Poor's 500-stock index that have released their second-quarter reports, the New York Times reported Sunday, revenue rose by a tidy 6.9 percent, but profits soared by a stunning 42.3 percent. Profits, that is, are increasing seven times faster than revenue. The mind, as it should, boggles.

How can America's corporations so defy gravity? Ever adaptive, they have evolved a business model that enables them to make money even while the strapped American consumer has cut back on purchasing. For one thing, they are increasingly selling and producing overseas. General Motors is going like gangbusters in China, where it now sells more cars than it does in the United States. In China, GM employs 32,000 assembly-line workers; that's just 20,000 fewer than the number of such workers it has in the States. And those American workers aren't making what they used to; new hires get $14 an hour, roughly half of what veterans pull down.

The GM model typifies that of post-crash American business: massive layoffs, productivity increases, wage reductions (due in part to the weakness of unions), and reduced sales at home; increased hiring and booming sales abroad. Another part of that model is cash retention. A Federal Reserve report last month estimated that American corporations are sitting on a record $1.8 trillion in cash reserves. As a share of corporate assets, that's the highest level since 1964.

Why invest in new plants, offices and workers, particularly here at home? Spooked by the 2008 crash, corporations want to keep more money under the mattress. More important, they're sitting pretty as profits rise.

Is this model sustainable? It's hard to say -- a double-dip recession could plunge their profits yet again. But from the American worker's perspective, the model, no less than a new downturn, is an unqualified disaster. It portends the kind of long-term, structural unemployment that we haven't seen since the 1930s. It locks into place a generation of reduced incomes.

This dystopian America already stares us in the face. Fully 46 percent of the unemployed have been without work for six months or more -- the highest level since the Bureau of Labor Statistics began measuring such things in 1947. Two years ago, just 18 percent of the unemployed were jobless for more than six months. America's private-sector job machine -- the marvel of the world since 1940 -- has clanged to a halt, and there's no place for it in corporations' new business model.

via www.washingtonpost.com

Long-Term Economic Pain for American Families - NYTimes.com

Put another way, the bottom is falling out for increasing numbers of Americans, and with the national employment situation stuck in an extended horror zone there is little to stop the free fall. In addition to tracking the percentage of Americans suffering household income losses of 25 percent or more, the index also shows that families are suffering steeper income declines than in previous decades.

According to the study, “Between 1985 and 1995, the typical (median) drop among those experiencing a 25 percent or greater available income loss was about 38.2 percent; between 1997 and 2007, it was 41.4 percent.”

Only the very well-to-do are out of the range of this buzz saw. “The fact that Americans are facing a very real and growing risk of large-scale economic loss is true across the spectrum,” said Mr. Hacker. “It’s true of blacks more than whites, but it’s true of whites, as well. It’s true of less affluent people more than more affluent people, but it’s true of the more affluent as well.

“If anything, we’re understating how bad things are out there right now.”

Policy makers seem bewildered by the terrible economic state of ordinary working Americans, including those once considered solidly in the middle class. Despite warnings back in 2008 that we were on the verge of another great depression, the big financial institutions and corporate America seem to be doing just fine now. But average Americans are hurting with no end to the pain in sight.

More than 14 million people are out of work and many more are either underemployed or so discouraged they’ve just stopped looking. Big corporations, sitting on fat profits even as the economy continues to struggle, have made it clear that they are not interested in putting a lot more people back to work any time soon.

Here is a link to the study discussed in the article.

via www.nytimes.com

t r u t h o u t | Robert Reich | The Great Decoupling of Corporate Profits From Jobs

Bottom line: Higher corporate profits no longer lead to higher employment. We’re witnessing a great decoupling of company profits from jobs.

The next supply-side economist who tells you companies need more incentive (i.e. lower taxes) before they’ll hire is living on another planet.

The reality is this: Big American companies may never rehire large numbers of workers. And they won’t even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won’t start buying against until they know they have reliable paychecks. 

via www.truth-out.org

Companies Wringing Huge Profits From Job Cuts - NYTimes.com

This seeming contradiction — falling sales and rising profits — is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year — more than a fifth of its work force.

As companies this month report earnings for the second quarter, news of healthy profits has helped the stock market — the Standard & Poor’s 500-stock index is up 7 percent for July — but the source of those gains raises deep questions about the sustainability of the growth, as well as the fate of more than 14 million unemployed workers hoping to rejoin the work force as the economy recovers.

“Because of high unemployment, management is using its leverage to get more hours out of workers,” said Robert C. Pozen, a senior lecturer at Harvard Business School and the former president of Fidelity Investments. “What’s worrisome is that American business has gotten used to being a lot leaner, and it could take a while before they start hiring again.”

And some of those businesses, including Harley-Davidson, are preparing for a future where they can prosper even if sales do not recover. Harley’s goal is to permanently be in a position to generate strong profits on a lower revenue base.

In some ways, the ability to raise profits in the face of declining sales is a triumph of productivity that makes the United States more globally competitive. The problem is that companies are not investing those earnings, instead letting cash pile up to levels not reached in nearly half a century.

“As long as corporations are reinvesting, the economy can grow,” said Ethan Harris, chief economist at Bank of America Merrill Lynch. “But if they’re taking those profits and saving them, rather than buying new equipment, it hurts overall growth. The longer this goes on, the more you worry about income being diverted to a sector that’s not spending.”

“There’s no question that there is an income shift going on in the economy,” Mr. Harris added. “Companies are squeezing their labor costs to build profits.”

The trend is hardly limited to Harley. Giants like General Electric and JPMorgan Chase, as well as smaller companies like Hasbro, the toymaker, all improved their bottom lines despite slowing sales in the second quarter. Among the S.& P. 500 companies that have reported second-quarter results, more than one in 10 had higher profits on lower sales, nearly twice the number in a typical quarter before the recession, according to Thomson Reuters.

“Whole industries are operating at new levels of profitability,” said David J. Kostin, chief United States equity strategist at Goldman Sachs. “In the downturn, companies managed to maintain higher profit margins than ever before.”

Profit margins — the percentage of revenue left over after expenses — crumble in most recessions, as overall sales fall but fixed costs like infrastructure, commodities and rent remain the same. In 2002, during the recession that followed the bursting of the technology bubble in addition to the Sept. 11 attacks, margins sank to 4.7 percent. Although the most recent downturn was far more severe, profit margins bottomed out at 5.9 percent in 2009 and quickly rebounded. By next year, analysts expect margins to hit 8.9 percent, a record high.

The difference this time is that companies wrung more savings out of their work forces, said Neal Soss, chief economist for Credit Suisse in New York. In fact, while wages and salaries have barely budged from recession lows, profits have staged a vigorous recovery, jumping 40 percent between late 2008 and the first quarter of 2010.

via www.nytimes.com

On Wall Street, crime pays very well

In a report issued Friday, a federal “special master” found that 17 big financial firms awarded nearly $2 billion in bonuses and retention payments to top executives during the period when they were receiving bailout funds from the US Treasury under the Troubled Asset Relief Program (TARP).

Kenneth Feinberg, the special master for TARP executive compensation, declared in a perfunctory four-page statement that he “did not determine that payments were contrary to the ‘public interest’ requiring monetary reimbursement.” He also claimed that he had no legal authority to rescind the bonuses or penalize the banks that awarded them.

A total of 419 banks participated in the TARP program between October 2008, when it was established in the midst of the Wall Street crash, and February 19, 2009, when new rules went into effect to regulate executive pay. But the bulk of the payments were made by 17 firms. The 600 executives at these banks received payouts, combining salary and bonuses, totaling $2.03 billion. This represents an average of $3.38 million per executive.

In press interviews after he delivered the report to the Treasury Department, Feinberg said that many of the payments came to more than $10 million per individual, amounts that he said “were in our view ill-advised.” He also called them undeserved, noting that in many cases bonuses were awarded because the bank “guaranteed it regardless of performance.”

The awarding of these bonuses represents direct robbery of the American people, since the banks that were paying these outrageous sums to their top executives were receiving hundreds of billions directly from the Treasury, as well as guarantees from the Treasury and the Federal Reserve that bring the total potential commitment of public funds to nearly $24 trillion.

While claiming that “Congress didn’t give me the power to do anything more than ask” for rescinding of the bonuses, Feinberg did not even do that. Moreover, in his report he did not name any of the executives who received the payments, nor even the institutions that awarded the bonanzas.

The 17 banks comprise the dominant Wall Street firms and a few of the biggest regional banks: the insurance giant AIG, American Express, Bank of America, Bank of New York Mellon, Boston Private, Capital One Financial, Citigroup, the CIT Group, Goldman Sachs, JPMorgan Chase, M&T Bank, Morgan Stanley, PNC Financial, Regions Financial, SunTrust Banks, US Bancorp and Wells Fargo.

Feinberg’s report was celebrated on Wall Street with undisguised gloating. The Wall Street Journal sneered that the so-called “pay czar” was ending his 18-month tenure “not with a bang but a whimper.”

via www.wsws.org

WikiLeaks disclosures unlikely to change course of Afghanistan war

The excerpt below is from the Washington Post. I've wondered a bit whether the wiki-leaks disclosure indicates a problem with my critique of publicity of the sort: look, publicity and disclosure do matter! Here is evidence of all sorts of awfulness that had been kept from the public!  Although there are good reasons not to count on the Post, I think my critique still stands. The most important reason: nothing in the leaks seems--so far--to be changing folks' minds about the war. There is an impact on political will. Those of against the war, are still against. Those in favor, still in favor. Those who don't want to think about, still don't want to think about it. Could the leaks add to pressure against the war? That's possible. Yet I think it's unlikely because of the current combination of multiple fragmented media, right wing attacks on reality, and a left still unlikely to oppose Obama. The first two reasons could be rephrased as communicative capitalism. The third reason is particular to the current conjuncture.

In the first 24 hours after the unauthorized release of more than 91,000 secret documents about the war in Afghanistan, a few things became clear to the officials, lawmakers and experts reading them:

-- New evidence that the war effort is plagued by unreliable Afghan and Pakistani partners seems unlikely to undermine fragile congressional support or force the Obama administration to shift strategy.

-- The disclosure of what are mostly battlefield updates does not appear to represent a major threat to national security or troops' safety, according to military officials.

-- The documents' release could compel President Obama to explain more forcefully the war's importance, military analysts said. Some have criticized Obama for not explaining the administration's strategy for bolstering the weak Afghan government and countering the Taliban's rise.

Blog Theory: feedback and capture in the circuits of drive (available now)

I just got my advance copy of Blog Theory from Polity. It looks great. The image is from Johan Grimonprez's Dial H-I-S-T-O-R-Y. Here is the back copy:

Blog Theory offers a critical theory of contemporary media. Furthering her account of communicative capitalism, Jodi Dean explores the ways new media practices like blogging and texting capture their users in intensive networks of enjoyment, production, and surveillance. Her wide-ranging and theoretically rich analysis extends from her personal experiences as a blogger, through media histories, to newly emerging social network platforms and applications.

Set against the background of the economic crisis wrought by neoliberalism, the book engages with recent work in contemporary media theory as well as with thinkers such as Giorgio Agamben, Jean Baudrillard, Guy Debord, Jacques Lacan, and Slavoj Zizek. Through these engagements, Dean defends the provocative thesis that reflexivity in complex networks is best understood via the psychoanalytic notion of the drives. She contends, moreover, that reading networks in terms of the drives enables us to grasp their real, human dimension, that is, the feelings and affects that embed us in the system.

In remarkably clear and lucid prose, Dean links seemingly trivial and transitory updates from the new mass culture of the internet to more fundamental changes in subjectivity and politics. Everyday communicative exchanges--from blog posts to text messages--have widespread effects, effects that not only undermine capacities for democracy but also entrap us in circuits of domination.

Geert Lovink

"If Ballard invited the 20th century viewer to witness their own mass atrocity exhibition, we now have the update for the 21st century: Jodi Dean's demolition job of the Internet as we know it. With Blog Theory we can finally terminate the hype of blogging and seriously engage the deeply distracted condition of the networked present. The incestuous relationship between journalism and bloggers is exposed to make way for critical reflections on techniques of self-management for our all-too-fragile identities."

McKenzie Wark

"Blog Theory is refreshingly free of received ideas about the wonderful new world of media. Jodi Dean manages the difficult art of being critical of new media without becoming a cranky curmudgeon. She uses psychoanalytic concepts to produce a synoptic view of the decline of symbolic efficiency under communicative capitalism, and the way the blogosphere participates in this dissipation of the totems and tokens of what we once thought of as the public sphere. She clears the way for imagining the politics of media by other means."

Sean Cubitt

"What happens to politics when there is no one in charge? The answer Jodi Dean gives, in this coruscating, rock'n'roll ride through new political and media theory, is communicative capitalism--the obligation to communicate in a new world turned into a market for communications. Dean's radical call for a new media politics will challenge political scientists, communication theorists, and media activists to sever the ties, and create and unforeseeable, dramatically material future."

Goldman Sachs to pay record settlement in fraud suit, change business practices

Goldman Sachs agreed Thursday to pay $550 million to settle a fraud suit brought by the Securities and Exchange Commission that accused the storied Wall Street bank of selling a subprime-mortgage investment that was secretly designed to fail.

The fine is the largest the SEC has ever assessed against a financial company. But the settlement also is striking because Goldman agreed to a host of changes to how it does business and because the bank, while not admitting wrongdoing, agreed to express "regret" for including "incomplete information" in marketing materials touting the investment to clients.

By doing so, Goldman acknowledged "the fundamental basis of our complaint," SEC enforcement director Robert Khuzami said at a news conference, standing with 10 colleagues who worked on the case. "Today's settlement is a stark reminder -- a very stark reminder -- that there will be a heavy price to be paid if firms violate the principles fundamental to securities law."

While Goldman will pay only a tiny fraction of its $13 billion in annual profits to resolve the claims, the settlement represents a black mark for the bank, which had insisted since the suit was filed three months ago that it had done nothing wrong. It comes on the same day that Congress sent legislation to the president to curb many Wall Street practices -- including ones that have made Goldman a lot of money.

via www.washingtonpost.com

World’s Rich Are Hoarding $10 Trillion in Cash - WSJ

How afraid are the wealthy right now?

According to a report from Scorpio Partnership, the world’s high-net-worth investors (with $1 million or more) have an extra $10 trillion lying around that they refuse to turn over to their wealth managers.

Granted, these investors have $16.5 trillion invested with private banks and wealth-management firms–up from $14.5 trillion at the end of 2008, largely reflecting market gains.

But Scorpio, a London consulting firm, says wealthy investors actually have more than $26 trillion that they could be giving the banks and wealth-management firms to manage. “This implies there is approximately $10 trillion of high-net-worth assets that could be advised by banks,” the firm says. “Capturing these assets is the real answer for industry recovery.”

That could take a while. The wealthy were burned so badly in the past three years from bad advice and bad investment decisions that they are unlikely to hand over their extra cash anytime soon. And can you blame them?

The banks surveyed in the Scorpio report won on average about $900 million each in new-client assets–a 60% drop from 2008. And that is despite the flood of millionaires created last year.

“Our global HNW data show there are strong signs of wealth creation even in these complex markets and yet new clients are still holding back from opening accounts with the industry,” said Sebastian Dovey, managing partner of Scorpio.

Not all of the blame goes to wealth-management firms. The world’s governments and volatile financial markets are probably the main causes of fear in the rich right now. Still, the industry hasn’t done itself any favors with its performance and lack of transparency.

via blogs.wsj.com